In a note cited by CNBC, HSBC analysts wrote that “our regime models show the equity market is now pricing a 35% probability of recession, up from 10% just two weeks ago, while the implied likelihood of stagflation has barely moved, holding at 8%.” They argued that current market behavior is more consistent with pricing for a recessionary outcome than the stagflation narrative that has been gaining traction.

Where the Dislocations Are Showing Up

HSBC analysts specifically identified oversold markets in South Korea, South Africa, and Indonesia as regions with valuations that look increasingly attractive — particularly because these markets are not among those most exposed to higher oil prices. For investors willing to ride out near-term volatility, exchange-traded funds targeting each of these three markets offer accessible entry points

iShares MSCI South Africa ETF (EZA)

The iShares MSCI South Africa ETF (NYSEARCA: EZA) carries an expense ratio of 0.59% and a yield of 1.42%, providing exposure to large- and mid-sized companies in South Africa. The fund pays a dividend twice a year; its most recent distribution came in at just over $3.61 per share, paid on December 22.

After rallying from an April low of roughly $37.50 to a high of $81.75, EZA has pulled back to $64.93, where it currently appears oversold. A retest of its prior high remains a reasonable target from here. Top holdings include Anglogold, Gold Fields, Standard Bank Group, and Impala Platinum, among its 27 total holdings.

iShares MSCI Indonesia ETF (EIDO)

The iShares MSCI Indonesia ETF (NYSEARCA: EIDO) also carries a 0.59% expense ratio, with a notably higher yield of 3.18%. It offers broad exposure to Indonesian equities, including Bank Central Asia, Astra International, Amman Mineral, and Bumi Resources Minerals, spread across 82 total holdings. The fund most recently paid a dividend of just over a penny per share on January 5.

EIDO has dropped from around $19.25 to a recent low of $15.33, pushing it into oversold territory. With patience, a retest of its prior high appears achievable from current levels.

iShares MSCI South Korea ETF (EWY)

The iShares MSCI South Korea ETF (NYSEARCA: EWY) rounds out the trio with an expense ratio of 0.59% and a yield of 0.27%. The fund provides exposure to large- and mid-sized South Korean companies, including Samsung, SK Hynix, Hyundai Motor, SK Square, and Kia Corporation, across 81 total holdings. It paid a dividend of just over $2.03 per share on December 19.

Of the three, EWY may be the most technically advanced in its recovery. After finding support at its 50-day moving average, the ETF has already begun to pivot higher. From its most recent traded price of $134.82, the initial target is a retest of $154.22 per share.

Recession Fears Can Create Opportunities

Recession fears are clearly on the rise, but history has shown that periods of maximum uncertainty can also produce maximum opportunity. For investors with a long-term perspective, the current environment may offer a chance to accumulate exposure to high-quality international assets at discounted prices — particularly in regions like South Korea, South Africa, and Indonesia that appear oversold yet remain fundamentally resilient. EZA, EIDO, and EWY each offer a straightforward vehicle for doing exactly that.